It has long been the stuff of dreams, of bestselling books and sometimes even of profit. The British love of France has led tens of thousands to cross the Channel in search of a better quality of life, a ruin to renovate, or simply to snap up a cheap second home.

But the expatriate community has become the latest casualty of recession, with a ruinous exchange rate biting into the rural idylls of the French countryside just as it has in the "Little England" retirement enclaves of Spain and Portugal. "Cheaper" France is vanishing as the pound slips closer to the rising euro, raising food, wine and energy costs, while devaluing the incomes of those getting wages or pensions from the UK.

"We're all doomed," said Linda Norton, who lives near Cherbourg in Normandy. "If we can't grow it, we won't be eating it next year."

Expats are returning to Britain in their droves, selling houses or leaving them on an increasingly stagnant property or holiday rental market, while sales of homes to UK buyers are down by 50% in some areas.

More than 200,000 British passport holders are registered as resident in France, with more than 100,000 owning second homes and countless others unregistered. The most popular areas are Dordogne, Normandy and, since the Channel tunnel opened, Pas de Calais. There, just 80 minutes' drive from Calais, surrounded by patchwork flat fields, is the village of Capelle-lès-Hesdin, population a little over 400. It has just three shops; the general store, the butcher's and the local computer wizard.

Tara and Gary Rozier were a typical London career couple, respectively a nurse and a lawyer, living in a small flat and bringing home £4,000 a month, but "somehow I was still living on my overdraft", said Tara. Now they raise daughters Hannah, five, and Katie, three, in the countryside, running their gites and growing their own vegetables. Both have made huge efforts to learn the language and integrate into the village and, while they fear the numbers of British visitors might dry up, they are not going back.

"We know people who have had to sell up," said Gary, 39. "But if we wanted to sell who is going to pay what it's worth except someone who was going to run a gite?" They hope that Brits who would normally go further afield will still brave the exchange rate to come to northern France. "It's still half the price Devon or Cornwall," said Tara.

A few minutes down the road from the Roziers live Kate and Mark Graves with their daughters Royan, 13, and Ciara, 11. They came from Maidstone, Kent, looking for a better quality of family life and have restored an old house with two small self-catering apartments.

"We found it," said Kate smiling. But the exchange rate is hitting them hard because Mark, 39, a chartered surveyor, is one of an army of cross-Channel commuters. He mostly works from home, but travels weekly to his office outside London and is paid in sterling. "I've lost €20,000 just in salary this year," he said. To cut costs, the couple have stopped using their central heating and rely on a wood-burning stove for warmth and won't be going back to the UK to visit family over Christmas.

"It's a shame," said Kate, 37, "but we have to cut our cloth. The idea of cheap France has gone. We're not going back like other people we know, though. Anyway, we probably couldn't sell this house, so we'd be stuffed. There are so many English second homes up for sale."

One of the second-home owners of Capelle-lès-Hesdin, where ferry prices are discussed more intensely than house prices, is Jill Ribbons, 63. She bought her detached, modern house with her sister and spends around a third of the year there, the remainder at her home in Surrey. The retired immigration officer was philosophical about currency fluctuations. "The British expect things to be done for us, it's that nanny state, we'll be looked after and nothing bad can happen mentality, so everyone is so shocked when it does," she said.

"I feel you shouldn't be here moaning about it. We came out here and bought their houses cheap, so to then start complaining is a bit crass. We took advantage. We had everything so smooth for so long."

It's a sentiment Michael Gibson, 67, recognises. He has lived in France for 11 years. "The exchange rate is biting hard - people came to France because life here was cheaper. They could buy an old ruin with a bit of land, keep animals and grow vegetables. To earn a living, they could look after gite change-overs and maisons secondaires. It was a sort of self-perpetuating merry-go-round. That was then, this is now. The merry-go-round has become a vicious circle. Those of us reliant on pensions are economising where we can. Fewer shopping trips, wine, newspapers."

George and Iris Belsham, a retired couple, are cutting out their daily English newspaper. They left their village near Canterbury for Capelle-lès-Hesdin when developers began building more houses and groups of teenagers began to hang around the local shop. "Here, the kids are behind doors at night," said Iris, a former PA.

"France was cheaper, quiet and friendly," said George, 76, a former lorry driver. They don't speak much French, but live happily with their five cats, although they are cutting back on eating out. They know some drastic belt tightening may be ahead. Iris has stopped looking up the exchange rate each morning: "It's too depressing," she said.

The French, too, are worrying that the British invasion is in retreat. Retired primary teacher Annie Lombardet came to Capelle-lès-Hesdin from Paris with husband, Andres, five years ago. The couple renovated a large 17th-century farmhouse and turned it into a gite

But there are no bookings after the new year. Lombardet said: "I'm not usually pessimistic, but it looks very bad. British people have always loved France and I think it is a pleasure to have them but we will see less, that's for sure."

· This article was amended on December 28 2008. We placed the author of the above piece in "Capelle-les-Hesdin, Normandy" but it is actually in the Nord-Pas-de-Calais region, adjacent to Picardy - but nowhere near Normandy. This has been corrected.